U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Mark One
For
the quarterly period ended
For the transition period from _______ to _______
Commission
File No.
(Name of small business issuer in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001
(Title of Class)
Indicate
by check mark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (Section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging Growth Company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:
| Class | Outstanding as of August 10, 2023 | |
| Common Stock, $0.001 |
PETVIVO HOLDINGS, INC.
FORM 10-Q
FOR THE PERIOD ENDED June 30, 2023
INDEX
| Page | ||
| SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 3 | |
| PART I. FINANCIAL INFORMATION | 4 | |
| Item 1. | Financial Statements | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3. | Qualitative and Quantitative Disclosures About Market Risk | 27 |
| Item 4. | Controls and Procedures | 27 |
| PART II. OTHER INFORMATION | 28 | |
| Item 1. | Legal Proceedings | 28 |
| Item 1A. | Risk Factors | 28 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |
| Item 3. | Defaults Upon Senior Securities | 29 |
| Item 4. | Mine Safety Disclosure | 29 |
| Item 5. | Other information | 29 |
| Item 6. | Exhibits | 29 |
| SIGNATURES | 30 | |
| 2 |
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of PetVivo Holdings, Inc. (the “Company”), to be materially different from future results, performance, or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies, and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that the projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC’), including our Annual Report on Form 10-K for our fiscal year ended March 31, 2023, (“2023 10-K Report”) and risks described in other SEC filings. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
| 3 |
PART I.
ITEM 1. FINANCIAL STATEMENTS
PETVIVO HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, 2023 (Unaudited) | March 31, 2023 | |||||||
| Assets: | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other assets | ||||||||
| Total Current Assets | ||||||||
| Property and Equipment, net | ||||||||
| Other Assets: | ||||||||
| Operating lease right-of-use | ||||||||
| Trademark and patents, net | ||||||||
| Security deposit | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Operating lease liability – short term | ||||||||
| Note payable and accrued interest | ||||||||
| Total Current Liabilities | ||||||||
| Other Liabilities | ||||||||
| Note payable and accrued interest (net of current portion) | ||||||||
| Operating lease liability (net of current portion) | ||||||||
| Total Other Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (see Note 9) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred Stock, par value $, shares authorized, shares issued and outstanding at June 30, 2023 and March 31, 2023 | ||||||||
| Common Stock, par value $, shares authorized, and issued and outstanding at June 30, 2023 and March 31, 2023, respectively | ||||||||
| Common Stock to be Issued | ||||||||
| Additional Paid-In Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
PETVIVO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Revenues | $ | $ | ||||||
| Cost of Sales | ||||||||
| Gross Profit | ||||||||
| Operating Expenses: | ||||||||
| Sales and Marketing | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Total Operating Expenses | ||||||||
| Operating Loss | ( | ) | ( | ) | ||||
| Other Income | ||||||||
| Interest income | ||||||||
| Total Other Income | ||||||||
| Loss before taxes | ( | ) | ( | ) | ||||
| Income Tax Provision | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Net Loss Per Share: | ||||||||
| Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Common Shares Outstanding: | ||||||||
| Basic and Diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
PETVIVO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
Three Months Ended June 30, 2023
| Common Stock | Additional Paid-in | Accumulated | Common Stock to be | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Issued | Total | |||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common stock sold | ( | ) | ||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Vesting of restricted stock units in lieu of compensation | ||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ) | ||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
Three Months Ended June 30, 2022
| Common Stock | Additional Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
PETVIVO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Three Months Ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss For The Period | $ | ( | ) | $ | ( | ) | ||
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Investor relations services paid in stock | ||||||||
| Consulting services paid in stock | ||||||||
| Stock issued in lieu of compensation | ||||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Decrease (increase) in prepaid expenses and other current assets | ( | ) | ||||||
| Decrease (increase) in accounts receivable | ( | ) | ||||||
| Increase in inventory | ( | ) | ( | ) | ||||
| (Decrease) increase in accounts payable and accrued expenses | ( | ) | ||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from common stock sold | ||||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Net Cash Provided by (Used in) Financing Activities | ( | ) | ||||||
| Net Decrease in Cash | ( | ) | ( | ) | ||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash Paid During The Period For: | ||||||||
| Interest | $ | $ | ||||||
| Taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES | ||||||||
| Increase to operating lease right of use asset and operating lease liability | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
PetVivo Holdings, Inc.
Notes to Financial Statements
June 30, 2023
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Organization and Description
The Company is in the business of licensing and commercializing our proprietary medical devices and biomaterials for the treatment and/or management of afflictions and diseases in animals, initially for dogs and horses. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such as osteoarthritis in dogs and horses in September 2021. The Company has a pipeline of additional products for the treatment of animals in various stages of development. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes and methods of use. The Company’s operations are conducted from its headquarter facilities in suburban Minneapolis, Minnesota.
(B) Basis of Presentation
PetVivo Holdings, Inc. (the “Company”) was incorporated in Nevada under a former name in 2009 and entered its current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in PetVivo, Inc. becoming a wholly-owned subsidiary of the Company. In April 2017, the Company acquired another Minnesota corporation, Gel-Del Technologies, Inc., through a statutory merger, which is also a wholly-owned subsidiary of the Company.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the three months ended June 30, 2023, are not necessarily indicative of results to be expected for the year ending March 31, 2024, or for any other interim period or for any future year. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2023.
(C) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned Minnesota corporations, Gel-Del Technologies, Inc. and PetVivo, Inc. All intercompany accounts have been eliminated upon consolidation.
(D) Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, inventory obsolescence, estimated useful lives and potential impairment of property and equipment and intangibles, estimate of fair value of share-based payments, distributor rebate payable, provision for product returns, right of use lease assets and liabilities and valuation of deferred tax assets.
(E) Cash and Cash Equivalents
The Company considers all highly-liquid, temporary cash investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at June 30, 2023.
| 8 |
(F) Concentration Risk
The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. At March 31, 2023, the Company did have cash balances in excess of the federally insured limits.
(G) Accounts Receivable
Accounts receivable consists primarily of amounts due from a distributor (see revenue recognition). Accounts receivable is recorded based on management’s assessment of the expected consideration to be received, based on a detailed review of historical collections. Management relies on the results of the assessment, which includes payment history of the applicable payer as a primary source of information in estimating the collectability of our accounts receivable. We update our assessment on a quarterly basis, which to date has not resulted in any material adjustments to the valuation of our accounts receivable. We believe the assessment provides reasonable estimates of our accounts receivable valuation, and therefore we believe that substantially all accounts receivable are fully collectible. Accordingly, as of June 30, 2023 and March 31, 2023, our allowance for credit losses was zero.
(H) Inventory
Inventories are recorded in accordance with Accounting Standards Codification (“ASC”) 330, Inventory, and are stated at the lower of cost or net realizable value. We account for inventories using the first in first out (“FIFO”) methodology. Provisions for inventory obsolescence are charged to Cost of Sales. There were no provisions for obsolescence for the three months ended June 30, 2023 and 2022, respectively.
(I) Property & Equipment
Property
and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged
to operations as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual
values) over the assets estimated useful life of
(J) Patents and Trademarks
The
Company capitalizes direct costs for the maintenance and advancement of their patents and trademarks and amortizes these costs over the
lesser of the useful life of
Basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
The Company had warrants outstanding as of June 30, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants is $ per share. These warrants are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of June 30, 2023, which are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had stock options outstanding as of June 30, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options is $ per share. These stock options are excluded from the weighted average number of shares because they were considered anti-dilutive.
| 9 |
The Company had warrants outstanding as of June 30, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants was $ per share. These warrants were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of June 30, 2022, which were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had options outstanding as of June 30, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options was $ per share. These options were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company uses the guidance in ASC 260 to determine if-converted loss per share. ASC 260 states that convertible securities should be considered exercised on the latter of the first day of the reporting period’s quarter or the inception date of the debt instrument. Also, the if-converted method shall not be applied for the purposes of computing diluted EPS if the effect would be anti-dilutive.
(L) Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 “Revenue from Contracts with Customers.”
The Company derives revenue from the sale of its pet care products directly to its veterinarian customers in the United States. The Company recognizes revenue when performance obligations under the terms of a contract with the veterinarian customer are satisfied. Product sales occur once control or title is transferred based on the commercial terms. Revenue is recognized upon delivery to the customer, which is when control of these products is transferred and in an amount that reflects the consideration the Company expects to receive for these products. Shipping costs charged to customers are reported as an offset to the respective shipping costs. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.
The
Company entered into a Distribution Services Agreement (the “Agreement”) with MWI Veterinary Supply Co. (the “Distributor”)
on June 17, 2022. Contracts with the Distributor are evidenced by individual executed purchase orders subject to the terms of the Agreement.
The contracts consist of a single performance obligation related to the sale of our pet care products. Product sales occur once control
or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon delivery to the Distributor; payment
is due within 60 days. The Agreement provides for a distribution fee payable to the Distributor equal to
For
the three months ended June 30, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $
Assets and liabilities (included in accrued expenses) under the Agreement were as follows:
| June 30, 2023 | March 31, 2023 | |||||||
| Accounts receivable | $ | $ | ||||||
| Rebate liability | ||||||||
| Distribution fee payable | ||||||||
(M) Research and Development
The Company expenses research and development costs as incurred.
| 10 |
(N) Fair Value of Financial Instruments
The Company applies the accounting guidance under ASC 820-10, “Fair Value Measurements”, as well as certain related Financial Accounting Standards Board (“FASB”) staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
| ● | Level 1 - quoted market prices in active markets for identical assets or liabilities. | |
| ● | Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
| ● | Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses and note payable and accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of June 30, 2023 and March 31, 2023, due to the short-term nature of these instruments and the Company’s borrowing rate of interest.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation of the Company’s note recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market, and (iii) contractual prices.
The
Company had
Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services
The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under the guidance of ASC 505-50.
Pursuant to ASC 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the date of grant.
The fair value of stock options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:
● Expected term of share options and similar instruments: Pursuant to ASC Paragraph 718-10-50-2(f)(2)(i), the expected term of stock options and similar instruments represents the period of time the stock options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holders’ expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holders’ expected exercise behavior.
| 11 |
● Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii), a thinly traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its stock price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses its average historical volatility over the expected contractual life of the stock options or similar instruments as its expected volatility.
● Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
● Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.
Pursuant to ASC Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.
Stock options are valued using the Black-Scholes option-pricing model. The Black Scholes valuation model requires the input of highly subjective assumptions. The assumptions include the expected term of the option, the expected volatility of the price of our common stock, the expected dividend yield, and the risk-free interest rate. These estimates involve inherent uncertainties and the significant application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future. We recognize compensation expense for these options on a straight-line basis over the requisite service period (see Note 11 – “Stockholders’ Equity”).
(Q) Income Taxes
The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
As required by ASC 450, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
The Company is not currently under examination by any federal or state jurisdiction.
The Company’s policy is to record tax-related interest and penalties as a component of operating expenses.
| 12 |
(R) Recent Accounting Pronouncements
The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as insurance premium finance loans held for investment, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted this standard in the condensed consolidated financial statements for the three months ended June 30, 2023. The change had no impact on the Company’s financial statements.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.
NOTE 2 – INVENTORY
As
of June 30, 2023 and March 31, 2023, the Company had inventory of $
The inventory components are as follows:
| June 30, 2023 | March 31, 2023 | |||||||
| Finished Goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Total Net | $ | $ | ||||||
NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
As
of June 30, 2023, the Company had $
As
of March 31, 2023 the Company had $
| 13 |
NOTE 4 – PROPERTY AND EQUIPMENT
The components of property and equipment were as follows:
| June 30, 2023 | March 31, 2023 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Production equipment | ||||||||
| R&D equipment | ||||||||
| Computer equipment and furniture | ||||||||
| Total, at cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Total Net | $ | $ | ||||||
Depreciation
expense was $
NOTE 5 – PATENTS AND TRADEMARKS
The components of patents and trademarks, all of which are finite-lived, were as follows:
| June 30, 2023 | March 31, 2023 | |||||||
| Patents | $ | $ | ||||||
| Trademarks | ||||||||
| Total at cost | ||||||||
| Accumulated Amortization | ( | ) | ( | ) | ||||
| Total net | $ | $ | ||||||
During
the three months ended June 30, 2023 and 2022, amortization expense was $
NOTE 6 – ACCRUED EXPENSES
The components of accrued expenses were as follows:
| June 30, 2023 | March 31, 2023 | |||||||
| Accrued payroll and related taxes | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued lease termination expense | ||||||||
| Total | $ | $ | ||||||
Pursuant
to a lease wherein our subsidiary, Gel-Del Technologies, Inc., was the lessee until and through the lease’s termination in fiscal
year 2018, the Company had recorded approximately $
NOTE 7 – NOTE PAYABLE
In
January 2020, the Company entered into a lease amendment for our corporate office facility whereby the lease term was extended through
November of 2026 in exchange for a loan of $
| 14 |
NOTE 8 – RETIREMENT PLAN
In
February 2021, the Company established a 401(k) retirement plan for its employees in which eligible employees can contribute a percentage
of their compensation. The Company may also make discretionary contributions. For the three months ended June 30, 2023 and 2022, the
Company made contributions to the plan of $
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Lease Obligations
We lease property and equipment under operating leases, typically with terms greater than 12 months, and determine if an arrangement contains a lease at inception. In general, an arrangement contains a lease if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. We record an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (‘‘ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options is at our discretion and is included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.
We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and nonlease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Condensed Consolidated Balance Sheets.
None of our lease agreements contain material restrictive covenants or residual value guarantees.
Buildings
The
Company entered into an -month lease for
The
Company entered into a month lease for
On
January 10, 2023, the Company entered into a new lease agreement for approximately
Vehicles
We
leased vehicles for certain members of our field sales organization in the three months ended June 30, 2023, under a vehicle fleet program
whereby the noncancelable lease is for a term of
| 15 |
Operating
lease expense for the three months ended June 30, 2023 and 2022, was $
The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of June 30, 2023:
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| $ | ||||
| Less: amount representing interest | ( | ) | ||
| Total | $ |
In
compliance with ASC 842, the Company recognized, based on
| Present value of future base rent lease payments | $ | |||
| Base rent payments included in prepaid expenses | ||||
| Present value of future base rent lease payments – net | $ |
As of June 30, 2023, the present value of future base rent lease payments – net is classified between current and non-current assets and liabilities as follows:
| Operating lease right-of-use asset | $ | |||
| Total operating lease assets | ||||
| Operating lease current liability | ||||
| Operating lease other liability | ||||
| Total operating lease liabilities | $ |
Employment Agreements
The Company has employment agreements with its executive officers. As of June 30, 2023, these agreements contain severance benefits ranging from one month to six months if terminated without cause.
Legal Proceedings
David
Masters, a former employee, board member, and consultant to the Company, has threatened to file suit against the Company to recover in
excess of $
| 16 |
NOTE 10 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.
The
Company incurred net losses $
The
Company issued convertible debentures of $
These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 11 – STOCKHOLDERS’ EQUITY
Equity Incentive Plan
On July 10, 2020, our Board of Directors unanimously approved the PetVivo Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Plan”), which authorized the issuance of up to shares of our common stock as awards under the 2020 Plan, subject to approval by our stockholders at the Annual Meeting of Stockholders held on September 22, 2020, when it was approved by our stockholders and became effective. On October 14, 2022, the stockholders of the Company approved the PetVivo Holdings, Inc. Amended and Restated 2020 Equity Incentive Plan (the “Amended Plan”), which increased the number of shares of the Company’s common stock which may be granted under the Amended Plan from to . Unless sooner terminated by the Board, the Amended Plan will terminate at midnight on July 10, 2030. The number of shares available to grant under the Plan was at June 30, 2023.
Employees, consultants, advisors of the Company (or any subsidiary), and non-employee directors of the Company will be eligible to receive awards under the Amended Plan. In the case of consultants and advisors, however, their services cannot be in connection with the offer and sale of securities in a capital-raising transaction nor directly or indirectly to promote or maintain a market for PetVivo common stock.
The Amended Plan is administered by the Compensation Committee of our Board of Directors (the “Committee”), which has full power and authority to determine when and to whom awards will be granted, and the type, amount, form of payment, any deferral payment, and other terms and conditions of each award. Subject to provisions of the Amended Plan, the Committee may amend or waive the terms and conditions, or accelerate the exercisability, of an outstanding award. The Committee also has the authority to interpret and establish rules and regulations for the administration of the Amended Plan. In addition, the Board of Directors may also exercise the powers of the Committee.
The aggregate number of shares of PetVivo common stock available and reserved to be issued under the Amended Plan is shares, but includes the following limits:
● the maximum aggregate number of shares of Common Stock granted as an Award to any Non-Employee Director in any one Plan Year will be shares; provided that such limit will not apply to any election of a Non-Employee Director to receive shares of Common Stock in lieu of all or a portion of any annual Board, committee, chair or other retainer, or any meeting fees otherwise payable in cash.
| 17 |
Awards can be granted for no cash consideration or for any cash and other consideration as determined by the Committee. Awards may provide that upon the grant or exercise thereof, the holder will receive cash, shares of PetVivo common stock, other securities or property, or any combination of these in a single payment, installments, or on a deferred basis. The exercise price per share of any stock option and the grant price of any stock appreciation right may not be less than the fair market value of PetVivo common stock on the date of grant. The term of any award cannot be longer than ten years from the date of grant. Awards will be adjusted in the event of a stock dividend or other distribution, recapitalization, forward or reverse stock split, reorganization, merger or other business combination, or similar corporate transaction, in order to prevent dilution or enlargement of the benefits or potential benefits provided under the Amended Plan.
The Amended Plan permits the following types of awards: stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance awards, non-employee director awards, other stock-based awards, and dividend equivalents.
Common Stock
For the three months ended June 30, 2023, the Company issued shares of common stock as follows:
| i) | shares in connection with the sale of stock in April
2023 in exchange for proceeds of |
| ii) | shares related to vesting of restricted stock units (“RSUs”), vesting in June 2023; |
| iii) |
shares related to vesting of restricted stock units (“RSUs”) to John Lai, the Company’s Chief Executive Officer,
in lieu of compensation valued as of $ |
| iv) |
shares in April 2023 to service providers for consulting services valued at market on the date of grant of $ |
| v) |
shares in May 2023 to service providers for consulting services valued at market on the date of grant of $ |
| vi) |
shares in June 2023 to service providers for consulting services valued at market on the date of grant of $ |
There were shares issued during the three months ended June 30, 2022.
The
Company has issued shares of common stock to providers of investor relations services which are reported in the Condensed Consolidated
Statements of Changes in Stockholders’ Equity. The value of these shares are reported as a prepaid expense and are amortized to
expense over the contractual life of the respective consulting agreements. The amortization of stock issued for services as reported
in the Condensed Consolidated Statements of Operations and Cash Flows was $
Time-Based Restricted Stock Units
We
have granted time-based restricted stock units to certain participants under the 2020 Plan that are stock-settled with common shares.
Time-based restricted stock units granted under the 2020 Plan vest over three years. Stock-based compensation expense included in the
Condensed Consolidated Statements of Operations for time-based restricted stock units was $
Our time-based restricted stock unit activity for the year ended March 31, 2023 and the three months ended June 30, 2023 was as follows:
| Units Outstanding | Weighted Average Grant Date Fair Value Per Unit | Aggregate Intrinsic Value (1) | ||||||||||
| Balance at March 31, 2022 | $ | $ | ||||||||||
| Granted | - | |||||||||||
| Vested | ( | ) | - | |||||||||
| Balance at March 31, 2023 | $ | |||||||||||
| Vested | ( | ) | - | |||||||||
| Balance at June 30, 2023 | $ | $ | ||||||||||
| (1) |
| 18 |
Stock Options
Stock options issued to employees and directors typically vest over (one year for directors) and have a contractual term of . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ and $ for the three months ended June 30, 2023 and 2022, respectively. At June 30, 2023, there was approximately $ of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of years.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Annually, we make predictive assumptions regarding future stock price volatility, dividend yield, expected term, and forfeiture rate. The dividend yield assumption is based on expected annual dividend yield on a grant date. To date, no dividends on common stock have been paid by us. Expected volatility for grants is based on our average historical volatility over a similar period as the expected term assumption used for our options as the expected volatility. The risk-free interest rate is based on yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. We use the “simplified method” to determine the expected term of the stock option grants. We utilize this method because we do not have sufficient public company exercise data in which to make a reasonable estimate.
| Three Months Ended | Year Ended | |||||||
| June 30, 2023 | March 31, 2023 | |||||||
| Expected term | years | years | ||||||
| Expected volatility | % - | % | % - | % | ||||
| Risk-free interest rate | % - | % | % – | % | ||||
| Expected dividend yield | % | % | ||||||
| Fair value on the date of grant | $ | - $ | $ | - $ | ||||
| Options Outstanding | Weighted- Average Exercise Price Per Share (1) | Weighted-Average Remaining Contractual Life | Aggregate Intrinsic Value (2) | |||||||||||
| Balance at March 31, 2022 | years | $ | ||||||||||||
| Granted | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||
| Balance at March 31, 2023 | $ | years | $ | |||||||||||
| Granted | $ | |||||||||||||
| Balance at June 30, 2023 | $ | years | $ | |||||||||||
| Options exercisable at June 30, 2023 | ||||||||||||||
| (1) | |
| (2) |
| 19 |
Stock options granted for the year ended March 31, 2023 and the three months ended June 30, 2023 were to employees and directors. The fair value of these options on the date of grant was $ and $ for the year ended March 31, 2023 and the three months ended June 30, 2023, respectively.
Options exercisable at June 30, 2023 had exercise prices ranging from $ to $.
| Three Months Ended | Year Ended | |||||||
| June 30, 2023 | Mar 31, 2023 | |||||||
| Number of: | ||||||||
| Non-vested options, beginning of period | ||||||||
| Non -vested options, end of period | ||||||||
| Vested options, end of period | ||||||||
| Three Months Ended | Year Ended | |||||||
| June 30, 2023 | Mar 31, 2023 | |||||||
| Weighted-average grant date fair value of: | ||||||||
| Non-vested options, beginning of period | $ | $ | ||||||
| Non-vested options, end of period | $ | $ | ||||||
| Vested options, end of period | $ | $ | ||||||
| Forfeited options, during the period | $ | $ | ||||||
Warrants
During
the three months ended June 30, 2023 and 2022,
A summary of warrant activity for the year ended March 31, 2023 and the three months ended June 30, 2023 is as follows:
| Number of Warrants | Weighted- Average Exercise Price | Warrants Exercisable | Weighted- Average Exercisable Price | |||||||||||||
| Outstanding, March 31, 2022 | $ | $ | ||||||||||||||
| Exercised for cash | ( | ) | ( | ) | ||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Outstanding, March 31, 2023 | ||||||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Outstanding, June 30, 2023 | $ | $ | ||||||||||||||
| 20 |
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||
Range of Warrant Exercise Price | Number of Warrants | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (Years) | Number of Warrants | Weighted- Average Exercise Price | |||||||||||||||
| $-$ | $ | $ | ||||||||||||||||||
| - | ||||||||||||||||||||
| - | ||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for warrants was $ and $20,831 for the three months ended June 30, 2023 and 2022, respectively. At June 30, 2023, there was no future unrecognized warrant expense.
For the three months ended June 30, 2023 and 2022, the total stock-based compensation on all instruments was $ and $, respectively.
NOTE 12 – SUBSEQUENT EVENTS
The
Company sold $
| 21 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
PetVivo Holdings, Inc. (the “Company,” “PetVivo,” “we” or “us) is an emerging biomedical device company focused on the manufacturing, commercialization, and licensing of innovative medical devices and therapeutics for animals. The Company has a pipeline of products for the treatment of animals. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes, and methods of use. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such as osteoarthritis in dogs and horses, in the second quarter of its fiscal year ended March 31, 2022.
The Company was incorporated in March 2009 under Nevada law under a different name. The Company operates as one segment from its corporate headquarters in Edina, Minnesota.
CURRENT BUSINESS OPERATIONS
The Company is primarily engaged in the business of commercializing and licensing products in the veterinary market to treat and/or manage afflictions of companion animals such as dogs and horses. Most of our technology was developed for human biomedical applications, and we intend to leverage the investments already expended in their development to commercialize treatments for horses and companion animals in a capital and time-efficient way.
The Company’s initial product, Spryng™, and its pipeline products are derived from proprietary biomaterials that simulate a body’s cellular tissue by virtue of their reliance upon natural protein and carbohydrate compositions which incorporate such “tissue building blocks” as collagen, elastin, and proteoglycans such as heparin. Since these are naturally-occurring in the body, we believe they have an enhanced biocompatibility with living tissues compared to synthetic biomaterials such as those based upon alpha-hydroxy polymers (e.g PLA, PLGA, and the like), polyacrylamides, and other “natural” biomaterials that may lack the multiple proteins incorporated into our biomaterials. These proprietary protein-based biomaterials are similar to the body’s tissue thus allowing integration and tissue repair in long-term implantation in certain applications.
Our initial product, Spryng™, is a veterinary medical device designed to help reinforce and/or augment articular cartilage tissue for the management of lameness and other joint related afflictions, such as osteoarthritis, in horses and companion animals. Spryng™ is an intra-articular injectable product of biocompatible and insoluble particles that are slippery, wet-permeable, durable, and resilient to enhance the force cushioning function of the synovial fluid and cartilage. The particles mimic natural cartilage in composition, structure, and hydration. Multiple joints can be treated simultaneously. Our particles are comprised of collagen, elastin, and heparin, similar components found in natural cartilage. These particles show an effectiveness to reinforce and/or augment the cartilage, which enhances the functionality of the joint (e.g. provide cushion or shock-absorbing features to the joint and to provide joint lubricity).
Osteoarthritis, a common inflammatory joint disease in both dogs and horses, is a chronic, progressive, degenerative joint disease that is caused by a loss of synovial fluid and/or the deterioration of joint cartilage. Osteoarthritis affects approximately 14 million dogs and 1 million horses in the $11 billion companion animal veterinary care and product sales market.
Despite the market size, veterinary clinics and hospitals have very few treatments and/or drugs for use in treating osteoarthritis in dogs, horses, and other pets. As there is no cure for osteoarthritis, current solutions treat symptoms, but do not manage the cause. The current treatment for osteoarthritis in dogs generally consists of the use of nonsteroidal anti-inflammatory drugs (or “NSAIDs”) which are approved to alleviate pain and inflammation but present the potential for side effects relating to gastrointestinal, kidney, and liver damage and do not halt or slow joint degeneration. The Company offers an alternative to traditional treatments that only address the symptoms of the affliction. Spryng™ with OsteoCushion™ technology addresses the affliction, loss of synovial fluid, and/or the deterioration of joint cartilage, rather than treating just the symptoms and, to the best of our knowledge, has elicited minimal adverse side effects in dogs and horses. Spryng™-treated dogs and horses have shown an increase in activity even after they no longer are receiving pain medication or other treatments. Other treatments for osteoarthritis include steroid and/or hyaluronic acid injections, which are used for treating pain, inflammation and/or joint lubrication, but can be slow acting and/or short lasting.
| 22 |
We believe Spryng™ is an optimal solution to safely improve joint function in animals for several reasons:
| ● | Spryng™ addresses the underlying problems which relate to deterioration of cartilage causing bones to contact each other and a lack of synovial fluid. Spryng™ provides a biocompatible lubricious cushion to the joint, which establishes a barrier between the bones, thereby protecting the remaining cartilage and bone. | |
| ● | Spryng™ is easily administered with the standard intra-articular injection technique. Multiple joints can be treated simultaneously. | |
| ● | Case studies indicate many dogs and horses have long-lasting multi-month improvement in lameness after having been treated with Spryng™. | |
| ● | After receiving a Spryng™ injection, many canines are able to discontinue the use of NSAID’s, eliminating the risk of negative side effects. | |
| ● | Spryng™ is an effective and economical solution for treating osteoarthritis. A single injection of Spryng™ is approximately $600 to $900 per joint and typically lasts for at least 12 months. |
Historically, drug sales represent up to 30% of revenues at a typical veterinary practice (Veterinary Practice News). Revenues and margins at veterinary practices are being eroded because online, big-box, and traditional pharmacies have recently started filling veterinary prescriptions. Veterinary practices are looking for ways to replace lost prescription revenues with safe and effective products. Spryng™ is a veterinarian-administered medical device that should expand practice revenues and margins. We believe that the increased revenues and margins provided by Spryng™ will accelerate its adoption rate and propel it forward as the standard of care for canine and equine lameness related to or due to synovial joint issues.
We commenced sales of Spryng™ in the second quarter of fiscal 2022 and plan to increase our commercialization efforts of Spryng™ in the United States through our distribution relationship with MWI Veterinary Supply Co. (“Distributor” or “MWI”) and the use of sales reps, clinical studies, and market awareness to educate and inform key opinion leaders on the benefits of SpryngTM.
We entered into a Distribution Services Agreement (“Distribution Agreement”) with MWI on June 17, 2022. Pursuant to the Agreement, we appointed MWI to distribute, advertise, promote, market, supply, and sell the Company’s lead product, SpryngTM on an exclusive basis for two (2) years within the United States (the “Territory”), transitioning to a non-exclusive basis thereafter; provided however that the Company shall extend the exclusivity for an additional one (1) year if MWI achieves certain performance targets agreed upon by the parties. The Company can continue to sell Spryng™ within the Territory to established accounts, which include: (a) customers who have purchased SpryngTM from the Company prior to the date of the Agreement, (b) customers who require that they deal directly with the Company, (c) governmental agencies, and (d) customers that order via the internet who are not directly solicited by MWI to purchase Spryng™. All customers must be licensed veterinary practices.
Spryng™ is classified as a veterinary medical device under the United States Food and Drug Administration (“FDA”) rules and pre-market approval is not required by the FDA. Spryng™ completed a safety and efficacy study in rabbits in 2007. Since that time, more than 2,000 horses and dogs have been treated with Spryng™. We entered into a clinical trial services agreement with Colorado State University on November 5, 2020. We expect this university clinical study to be completed in March 2024. Additionally, the Company successfully completed an equine tolerance study in March 2022 and began two canine clinical studies with Ethos Veterinary Health, the first beginning in May of 2022 with anticipated completion in October 2023, and the second beginning in June of 2023 with an expected completion in October 2024. We anticipate these and other studies that we plan to initiate will be primarily used to expand our distribution outlets since the large international and national distributors generally require a third-party university study and other third-party studies prior to including a product in their catalog of products.
| 23 |
We manufacture our products in an ISO 7 certified clean room manufacturing facility in Minneapolis using our patented and scalable self-assembly production process, which minimizes the infrastructure requirements and manufacturing risks to deliver a consistent, high-quality product while being responsive to volume requirements. A second ISO cleanroom facility is expected to be operational later this year. We believe that having two manufacturing facilities will help us minimize supply risks, allow for continued scaling of our production capacity, and expand our research and development facilities.
We also have a pipeline of therapeutic devices for both veterinary and human clinical applications. Some such devices may be regulated by the FDA or other equivalent regulatory agencies, including but not limited to the Center for Veterinary Medicine (“CVM”). We anticipate growing our product pipeline through the acquisition or in-licensing of additional proprietary products from human medical device companies specifically for use in pets. In addition to commercializing our own products in strategic market sectors and in view of the Company’s vast proprietary product pipeline, the Company may establish strategic out-licensing partnerships to provide secondary revenues.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our 2023 10-K Report and the condensed consolidated financial statements and related notes in Item 1, Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q (“10-Q Report”). The following discussion may contain forward-looking statements, and our actual results may differ materially from the results suggested by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2023 10-K Report under the heading “Risk Factors,” as updated and supplemented by risks described in other SEC filings. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
We are a smaller reporting company and have incurred substantial losses in connection with our operations. We will need substantial capital to pursue our current plans to commercialize our initial product, Spryng™.
RESULTS OF OPERATIONS
| For the Three Months Ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Revenues | $ | 117,183 | $ | 58,174 | ||||
| Cost of Sales | 82,269 | 53,020 | ||||||
| Total Operating Expenses | 2,928,491 | 1,971,247 | ||||||
| Total Other Income | - | 665 | ||||||
| Net Loss | $ | (2,893,577 | ) | $ | (1,965,428 | ) | ||
| Net loss per share - basic and diluted | $ | (0.25 | ) | $ | (0.20 | ) | ||
For The Three Months Ended June 30, 2023 Compared to The Three Months Ended June 30, 2022
Total Revenues. Revenues were $117,183 and $58,174 for three months ended June 30, 2023 and 2022, respectively. Revenues in the three months ended June 30, 2023 consist of sales of our Spryng™ products to our Distributor of $33,790 and to veterinary clinics in the amount of $83,393. In the three months ended June 30, 2022, our revenues of $58,174 consisted entirely of sales to veterinary clinics. The increase in our revenues in the three months ended June 30, 2023, compared to the three months ended June 30, 2022, is due to sales to our Distributor pursuant to our Distribution Agreement and increased sales to veterinary clinics.
| 24 |
Cost of Sales. Cost of sales were $82,269 and $53,020 for the three months ended June 30, 2023 and 2022, respectively. Cost of sales includes product costs related to the sale of our Spryng™ products and labor and overhead costs. The increase in cost of sales in the three months ended June 30, 2023 is due to the increased sales to our Distributor pursuant to our Distribution Agreement and increased sales to veterinary clinics.
Operating Expenses. Operating expenses were $2,928,491 and $1,971,247 for the three months ended June 30, 2023 and 2022, respectively. The increase is primarily due to increased general and administrative (“G&A”) expenses and sales and marketing expenses related to the sale of our Spryng™ products.
General and administrative (“G&A”) expenses were $1,762,798 and $1,243,022 for the three months ended June 30, 2023 and 2022, respectively. General and administrative expenses include compensation and benefits, contracted services, legal and consulting fees, and stock compensation expenses.
Sales and marketing expenses were $941,886 and $656,569 for the three months ended June 30, 2023 and 2022, respectively. Sales and marketing expenses include compensation, consulting, tradeshows, and stock compensation costs to support the launch of our Spryng™ product.
Research and development (“R&D”) expenses were $223,807 and $71,656 for the three months ended June 30, 2023 and 2022, respectively. The increase was related to clinical studies and efforts to support the launch of Spryng™.
Operating Loss. As a result of the foregoing, our operating loss was $2,893,577 and $1,966,093 for the three months ended June 30, 2023 and 2022, respectively. The increase was related to the costs to support the launch of Spryng™.
Other Income. Other income was $0 for the three months ended June 30, 2023 as compared to other income of $665 for the three months ended June 30, 2022. Other income in 2022 consisted of net interest income.
Net Loss. Our net loss for the three months ended June 30, 2023 was $2,893,577 or ($0.25) per share as compared to a net loss of $1,965,428 or ($0.20) per share for the three months ended June 30, 2022. The increase was related to the costs to support the launch of Spryng™. The weighted average number of shares outstanding was 11,657,035 compared to 9,988,361 for the three months ended June 30, 2023 and 2022, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2023, our current assets were $1,016,382, including $218,978 in cash and cash equivalents. In comparison, our current liabilities as of that date were $1,464,943 including $1,305,695 of accounts payable and accrued expenses. Our working capital deficit as of June 30, 2023 was $448,561. On July 27, 2023, the Company raised $550,000 through the sale of convertible debentures in a private offering to three accredited investors. On August 9, 2023, the Company sold 1,200,002 shares of common stock in a registered direct offering to two accredited investors (“Investors”) at a price of $1.50 per share (“Registered Offering”). In a concurrent private offering (“Private Offering, and together with the Registered Offering, the “Offering”), the Company issued an aggregate of 1,200,002 warrants (“Private Warrants”) to the Investors for no additional consideration. The Private Warrants have an exercise price of $2.00 per share, will be exercisable for cash six (6) months after the issuance date and will expire three years following the initial exercise date. Net proceeds from the Offering were approximately $1,775,000 after deducting offering expenses of $25,000.
The Company has continued to realize losses from operations. As a result of our sale of convertible debentures in the amount of $550,000 and proceeds of $1,775,000 from the sale of common stock, we believe we will have sufficient cash to meet our anticipated operating costs and capital expenditure requirements for at least the next three months. We will need to raise additional capital in the future to support our efforts to commercialize Spryng™ and our ongoing operations. We expect to continue to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund our business expansion. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. There can be no guarantee that the Company will be successful in its ability to raise additional capital to fund its business plan.
Net Cash Used in Operating Activities – We used $2,163,369 of net cash in operating activities for the three months ended June 30, 2023. This cash used in operating activities was primarily attributable to our net loss of $2,893,577, partially offset by stock-based compensation expense of $413,030, consulting services paid in stock of $123,078, and stock issued for investor relations services of $121,290.
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Net Cash Used in Investing Activities – We used $47,394 of net cash in investing activities for the three months ended June 30, 2023, consisting of costs capitalized for manufacturing and computer equipment.
Net Cash Provided by Financing Activities – During the three months ended June 30, 2023, we provided net cash of $1,956,094 from the sale of common stock offset by $1,667 in repayments of note payable.
Inventory
Inventories are stated at cost, subject to the lower of cost or net realizable value. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. Net realizable value is the estimated selling price less estimated costs of completion, disposal, and transportation. We regularly review inventory quantities on hand through an inventory count.
At June 30, 2023, the Company’s inventory had a carrying value of $406,030 and was broken down into $27,473 of finished goods, $76,011 of work in process, and $302,546 in raw materials.
At March 31, 2023, the Company’s inventory had a carrying value of $370,283 and was broken down into $13,159 of finished goods, $53,398 of work in process, and $303,726 in raw materials.
MATERIAL COMMITMENTS
Note Payable
As of June 30, 2023, we are obligated on a note and accrued interest of $25,684.
OFF-BALANCE SHEET ARRANGEMENTS
As of June 30, 2023, and as of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The report of independent registered public accounting firm accompanying our March 31, 2023 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. Our working capital deficit at June 30, 2023 was $448,561. On July 27, 2023, the Company raised $550,000 through the sale of convertible debentures in a private offering to three accredited investors. On August 9, 2023, the Company sold 1,200,002 shares of common stock at a price of $1.50 per share in a Registered Direct Offering to the Investors. In a concurrent Private Offering, the Company issued an aggregate of 1,200,002 Private Warrants to the Investors. Net proceeds from this Offering were approximately $1,775,000 after deducting offering expenses of $25,000. We believe the proceeds from this private offering and sale of common stock are sufficient to fund operations for the next three months (see Liquidity and Capital Resources above).
We have continued to realize losses from operations. We will need to raise additional capital in the future to support our efforts to commercialize Spryng™ and our ongoing operations. We expect to continue to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund our business expansion. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. There can be no guarantee that the Company will be successful in its ability to raise additional capital to fund its business plan.
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CRITICAL ACCOUNTING POLICIES
We prepare our consolidated financial statements in accordance with generally accepted accounting standards in the United States of America. Our significant accounting policies are described in Note 1 to our condensed consolidated financial statements attached hereto. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of the condensed consolidated financial statements.
RECENTLY ISSUED ACCOUNTING STANDARDS
The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Not required
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures.
Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective.
Changes in internal control over financial reporting.
There were no significant changes in our internal control over financial reporting in the first quarter of our fiscal year ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business, the resolution of which we do not anticipate would have, individually or in the aggregate, a material adverse effect on our business, financial condition, or results of operations.
Refer to Note 9. Commitments and Contingencies, in the Notes to Condensed Consolidated Financial Statements set forth in Part I, Item 1 Financial Statements of this Quarterly Report, for further information regarding legal contingencies.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for our fiscal year ended March 31, 2023. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition, and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition, or operating results in the future.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On January 1, 2023, the Company entered into a services agreement with a consultant for a 12 month period. On the first day of April, May, and June, 2023, the Company issued 16,666 shares of its restricted common stock (for an aggregate of 49,998 shares) to the consultant for services rendered to the Company, which shares were valued at $48,581, $40,332, and $34,165, respectively.
On the first day of April, May, and June 2023, the Company issued 10,100 shares of its restricted common stock, for an aggregate of 30,300 shares, to its CEO in lieu of compensation for the three months valued at $74,589.
In April, May, and June 2023, the Company granted options to purchase an aggregate of 374,239 shares of our common stock under the PetVivo Holdings, Inc. Amended and Restated 2020 Equity Plan (“Amended Plan”) to 13 employees and 1 director. The exercise price of these options was the closing price of the Company’s common stock on the date of the grant, which ranged from $2.02 per share to $2.74 per share. The Employee options vest over a period of three years, with the first tranche vesting on the anniversary of the grant date. The employee options expire on the earlier of the date on which the employee’s service with the Company is terminated or seven years after the grant date.
On April 14, 2023, the Company made an initial grant of options to a new director to purchase 10,000 shares of the Company’s common stock. The options have an exercise price equal to $2.74, the closing price of the Company’s common stock on the date of grant, and the term is for seven years from the grant date. The options will vest on April 13, 2024, subject to continued service by the director through the vesting date. The new director also received a grant of options to purchase 10,239 shares at an exercise price of $2.74 per share, which represents his pro-rata compensation for serving as a Board member for the period between April 14, 2023 and September 30, 2023. The options vest on the earlier of (i) September 30, 2023, or (ii) the day immediately preceding the Company’s next annual meeting of stockholders following the grant date.
In June 2023, the Company issued 6,250 shares of common stock upon the vesting of restricted stock unit issued to two employees.
All of the transactions described above were exempt from registration in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering. The consultants in these transactions represented their intention to acquire these securities for investment only and not with a view to offer or sell, in connection with any distribution of the securities, and appropriate legends were affixed to the share certificates and instruments issued in such transactions.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not required.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
The following exhibits are filed as part of this Quarterly Report.
** Filed herewith
| 29 |
PETVIVO HOLDINGS, INC.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| August 10, 2023 | By: | /s/ John Lai |
| John Lai | ||
| Its: | CEO, President, and Director | |
| (Principal Executive Officer) | ||
| August 10, 2023 | By: | /s/ Robert J. Folkes |
| Robert J. Folkes | ||
| Its: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
| 30 |
EXHIBIT 31.1
Certification of Principal Executive Officer
Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended,
As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002
I, John Lai, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of PetVivo Holdings, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 10, 2023 | By: | /s/ John Lai |
| John Lai | ||
| CEO, President, and Director | ||
| (Principal Executive Officer) |
EXHIBIT 31.2
Certification of Principal Financial Officer
Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended,
As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002
I, Robert J. Folkes, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of PetVivo Holdings, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 10, 2023 | By: | /s/ Robert J. Folkes |
| Robert J. Folkes | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
EXHIBIT 32.1
Certification of Principal Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of PetVivo Holdings, Inc., a Nevada corporation (the “Company”), on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John Lai, Principal Executive Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: August 10, 2023 | By: | /s/ John Lai |
| John Lai | ||
| CEO, President and Director | ||
| (Principal Executive Officer) |
EXHIBIT 32.2
Certification of Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of PetVivo Holdings, Inc., a Nevada corporation (the “Company”), on Form 10-Q for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert J. Folkes, Principal Financial Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: August 10, 2023 | By: | /s/ Robert J. Folkes |
| Robert J. Folkes | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 250,000,000 | 250,000,000 |
| Common stock, shares issued | 11,830,353 | 10,950,220 |
| Common stock, shares outstanding | 11,830,353 | 10,950,220 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Statement [Abstract] | ||
| Revenues | $ 117,183 | $ 58,174 |
| Cost of Sales | 82,269 | 53,020 |
| Gross Profit | 34,914 | 5,154 |
| Operating Expenses: | ||
| Sales and Marketing | 941,886 | 656,569 |
| General and administrative | 1,762,798 | 1,243,022 |
| Research and development | 223,807 | 71,656 |
| Total Operating Expenses | 2,928,491 | 1,971,247 |
| Operating Loss | (2,893,577) | (1,966,093) |
| Other Income | ||
| Interest income | 665 | |
| Total Other Income | 665 | |
| Loss before taxes | (2,893,577) | (1,965,428) |
| Income Tax Provision | ||
| Net Loss | $ (2,893,577) | $ (1,965,428) |
| Net Loss Per Share: | ||
| Basic | $ (0.25) | $ (0.20) |
| Diluted | $ (0.25) | $ (0.20) |
| Weighted Average Common Shares Outstanding: | ||
| Basic | 11,657,035 | 9,988,361 |
| Diluted | 11,657,035 | 9,988,361 |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Common Stock To Be Issued [Member] |
Total |
|---|---|---|---|---|---|
| Balance at Mar. 31, 2022 | $ 9,988 | $ 69,103,155 | $ (63,126,421) | $ 5,986,722 | |
| Balance, shares at Mar. 31, 2022 | 9,988,361 | ||||
| Stock-based compensation | 231,231 | 231,231 | |||
| Net loss | (1,965,428) | (1,965,428) | |||
| Balance at Jun. 30, 2022 | $ 9,988 | 69,334,386 | (65,091,849) | 4,252,525 | |
| Balance, shares at Jun. 30, 2022 | 9,988,361 | ||||
| Balance at Mar. 31, 2023 | $ 10,950 | 72,420,604 | (71,844,029) | $ 137,500 | 725,025 |
| Balance, shares at Mar. 31, 2023 | 10,950,220 | ||||
| Common stock sold | $ 794 | 2,092,800 | (137,500) | 1,956,094 | |
| Common stock sold, shares | 793,585 | ||||
| Stock issued for services | $ 50 | 123,028 | 123,078 | ||
| Stock issued for services, shares | 49,998 | ||||
| Stock-based compensation | 413,030 | 413,030 | |||
| Vesting of restricted stock units in lieu of compensation | $ 31 | 74,558 | 74,589 | ||
| Vesting of restricted stock units in lieu of compensation, shares | 30,300 | ||||
| Vesting of restricted stock units | $ 6 | (6) | |||
| Vesting of restricted stock units, shares | 6,250 | ||||
| Net loss | (2,893,577) | (2,893,577) | |||
| Balance at Jun. 30, 2023 | $ 11,831 | $ 75,124,014 | $ (74,737,606) | $ 398,239 | |
| Balance, shares at Jun. 30, 2023 | 11,830,353 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Organization and Description
The Company is in the business of licensing and commercializing our proprietary medical devices and biomaterials for the treatment and/or management of afflictions and diseases in animals, initially for dogs and horses. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such as osteoarthritis in dogs and horses in September 2021. The Company has a pipeline of additional products for the treatment of animals in various stages of development. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes and methods of use. The Company’s operations are conducted from its headquarter facilities in suburban Minneapolis, Minnesota.
(B) Basis of Presentation
PetVivo Holdings, Inc. (the “Company”) was incorporated in Nevada under a former name in 2009 and entered its current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in PetVivo, Inc. becoming a wholly-owned subsidiary of the Company. In April 2017, the Company acquired another Minnesota corporation, Gel-Del Technologies, Inc., through a statutory merger, which is also a wholly-owned subsidiary of the Company.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the three months ended June 30, 2023, are not necessarily indicative of results to be expected for the year ending March 31, 2024, or for any other interim period or for any future year. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2023.
(C) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned Minnesota corporations, Gel-Del Technologies, Inc. and PetVivo, Inc. All intercompany accounts have been eliminated upon consolidation.
(D) Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, inventory obsolescence, estimated useful lives and potential impairment of property and equipment and intangibles, estimate of fair value of share-based payments, distributor rebate payable, provision for product returns, right of use lease assets and liabilities and valuation of deferred tax assets.
(E) Cash and Cash Equivalents
The Company considers all highly-liquid, temporary cash investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at June 30, 2023.
(F) Concentration Risk
The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. At March 31, 2023, the Company did have cash balances in excess of the federally insured limits.
(G) Accounts Receivable
Accounts receivable consists primarily of amounts due from a distributor (see revenue recognition). Accounts receivable is recorded based on management’s assessment of the expected consideration to be received, based on a detailed review of historical collections. Management relies on the results of the assessment, which includes payment history of the applicable payer as a primary source of information in estimating the collectability of our accounts receivable. We update our assessment on a quarterly basis, which to date has not resulted in any material adjustments to the valuation of our accounts receivable. We believe the assessment provides reasonable estimates of our accounts receivable valuation, and therefore we believe that substantially all accounts receivable are fully collectible. Accordingly, as of June 30, 2023 and March 31, 2023, our allowance for credit losses was zero.
(H) Inventory
Inventories are recorded in accordance with Accounting Standards Codification (“ASC”) 330, Inventory, and are stated at the lower of cost or net realizable value. We account for inventories using the first in first out (“FIFO”) methodology. Provisions for inventory obsolescence are charged to Cost of Sales. There were no provisions for obsolescence for the three months ended June 30, 2023 and 2022, respectively.
(I) Property & Equipment
Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the assets estimated useful life of 3 to 5 years for production and computer equipment and furniture and 5 to 7 years for leasehold improvements.
(J) Patents and Trademarks
The Company capitalizes direct costs for the maintenance and advancement of their patents and trademarks and amortizes these costs over the lesser of the useful life of 60 months or the life of the patent. We evaluate the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
Basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
The Company had warrants outstanding as of June 30, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants is $ per share. These warrants are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of June 30, 2023, which are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had stock options outstanding as of June 30, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options is $ per share. These stock options are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had warrants outstanding as of June 30, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants was $ per share. These warrants were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of June 30, 2022, which were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had options outstanding as of June 30, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options was $ per share. These options were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company uses the guidance in ASC 260 to determine if-converted loss per share. ASC 260 states that convertible securities should be considered exercised on the latter of the first day of the reporting period’s quarter or the inception date of the debt instrument. Also, the if-converted method shall not be applied for the purposes of computing diluted EPS if the effect would be anti-dilutive.
(L) Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 “Revenue from Contracts with Customers.”
The Company derives revenue from the sale of its pet care products directly to its veterinarian customers in the United States. The Company recognizes revenue when performance obligations under the terms of a contract with the veterinarian customer are satisfied. Product sales occur once control or title is transferred based on the commercial terms. Revenue is recognized upon delivery to the customer, which is when control of these products is transferred and in an amount that reflects the consideration the Company expects to receive for these products. Shipping costs charged to customers are reported as an offset to the respective shipping costs. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.
The Company entered into a Distribution Services Agreement (the “Agreement”) with MWI Veterinary Supply Co. (the “Distributor”) on June 17, 2022. Contracts with the Distributor are evidenced by individual executed purchase orders subject to the terms of the Agreement. The contracts consist of a single performance obligation related to the sale of our pet care products. Product sales occur once control or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon delivery to the Distributor; payment is due within 60 days. The Agreement provides for a distribution fee payable to the Distributor equal to 5% of gross monthly sales payable in 45 days; the distribution fee is netted against revenue. The Agreement provides for a rebate payable to the Distributor based on annual sales volume that is retroactively applied. The rebate is estimated under the expected value method and is netted against revenue. Sales are subject to various right of return provisions; the Company uses an expected value method to estimate returns and has determined that any returns would be immaterial as of June 30, 2023. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.
For the three months ended June 30, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $33,790 and $0, respectively. This represents 29% of total revenues for the three-month period ended June 30, 2023.
Assets and liabilities (included in accrued expenses) under the Agreement were as follows:
(M) Research and Development
The Company expenses research and development costs as incurred.
(N) Fair Value of Financial Instruments
The Company applies the accounting guidance under ASC 820-10, “Fair Value Measurements”, as well as certain related Financial Accounting Standards Board (“FASB”) staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses and note payable and accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of June 30, 2023 and March 31, 2023, due to the short-term nature of these instruments and the Company’s borrowing rate of interest.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation of the Company’s note recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market, and (iii) contractual prices.
The Company had no assets and liabilities measured at fair value on a recurring basis on June 30, 2023 and March 31, 2023.
Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services
The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under the guidance of ASC 505-50.
Pursuant to ASC 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the date of grant.
The fair value of stock options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:
● Expected term of share options and similar instruments: Pursuant to ASC Paragraph 718-10-50-2(f)(2)(i), the expected term of stock options and similar instruments represents the period of time the stock options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holders’ expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holders’ expected exercise behavior.
● Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii), a thinly traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its stock price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses its average historical volatility over the expected contractual life of the stock options or similar instruments as its expected volatility.
● Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
● Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.
Pursuant to ASC Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.
Stock options are valued using the Black-Scholes option-pricing model. The Black Scholes valuation model requires the input of highly subjective assumptions. The assumptions include the expected term of the option, the expected volatility of the price of our common stock, the expected dividend yield, and the risk-free interest rate. These estimates involve inherent uncertainties and the significant application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future. We recognize compensation expense for these options on a straight-line basis over the requisite service period (see Note 11 – “Stockholders’ Equity”).
(Q) Income Taxes
The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
As required by ASC 450, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
The Company is not currently under examination by any federal or state jurisdiction.
The Company’s policy is to record tax-related interest and penalties as a component of operating expenses.
(R) Recent Accounting Pronouncements
The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as insurance premium finance loans held for investment, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted this standard in the condensed consolidated financial statements for the three months ended June 30, 2023. The change had no impact on the Company’s financial statements.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable.
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INVENTORY |
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| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORY | NOTE 2 – INVENTORY
As of June 30, 2023 and March 31, 2023, the Company had inventory of $406,030 and $370,283, respectively.
The inventory components are as follows:
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PREPAID EXPENSES AND OTHER CURRENT ASSETS |
3 Months Ended |
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Jun. 30, 2023 | |
| Prepaid Expenses And Other Current Assets | |
| PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of June 30, 2023, the Company had $344,266 in prepaid expenses and other current assets consisting primarily of $83,000 in tradeshows, $70,000 in insurance costs, $57,000 in supplier advances, $47,000 in Nasdaq and FINRA fees, $32,000 in board compensation, and $26,000 in software subscription fees.
As of March 31, 2023 the Company had $491,694 in prepaid expenses and other current assets consisting primarily of $115,000 in investor relations services, $130,000 in insurance costs, $63,000 in Nasdaq and FINRA fees, $56,000 in board compensation, $42,000 in tradeshows, $42,000 in supplier advance, and $19,000 in software subscription fees.
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PROPERTY AND EQUIPMENT |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT
The components of property and equipment were as follows:
Depreciation expense was $29,011 and $25,326 for the three months ended June 30, 2023 and 2022, respectively.
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PATENTS AND TRADEMARKS |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PATENTS AND TRADEMARKS | NOTE 5 – PATENTS AND TRADEMARKS
The components of patents and trademarks, all of which are finite-lived, were as follows:
During the three months ended June 30, 2023 and 2022, amortization expense was $2,138 and $2,227, respectively.
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ACCRUED EXPENSES |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCRUED EXPENSES | NOTE 6 – ACCRUED EXPENSES
The components of accrued expenses were as follows:
Pursuant to a lease wherein our subsidiary, Gel-Del Technologies, Inc., was the lessee until and through the lease’s termination in fiscal year 2018, the Company had recorded approximately $332,000 as a potential payable to the lessor. This liability remains outstanding as of June 30, 2023 and March 31, 2023.
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NOTE PAYABLE |
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Jun. 30, 2023 | |
| Debt Disclosure [Abstract] | |
| NOTE PAYABLE | NOTE 7 – NOTE PAYABLE
In January 2020, the Company entered into a lease amendment for our corporate office facility whereby the lease term was extended through November of 2026 in exchange for a loan of $42,500. The note payable accrues interest at a rate of 6% per annum. At June 30, 2023 and March 31, 2023, the amount outstanding on the note was $25,684 and $27,351, respectively. At June 30, 2023, the Company classified $7,034 as a current liability and $18,650 in other liabilities. At March 31, 2023, the Company classified $6,936 as a current liability and $20,415 in other liabilities.
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RETIREMENT PLAN |
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Jun. 30, 2023 | |
| Retirement Benefits [Abstract] | |
| RETIREMENT PLAN | NOTE 8 – RETIREMENT PLAN
In February 2021, the Company established a 401(k) retirement plan for its employees in which eligible employees can contribute a percentage of their compensation. The Company may also make discretionary contributions. For the three months ended June 30, 2023 and 2022, the Company made contributions to the plan of $12,554 and $6,158, respectively.
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COMMITMENTS AND CONTINGENCIES |
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| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES
Lease Obligations
We lease property and equipment under operating leases, typically with terms greater than 12 months, and determine if an arrangement contains a lease at inception. In general, an arrangement contains a lease if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. We record an operating lease liability at the present value of lease payments over the lease term on the commencement date. The related right of use (‘‘ROU”) operating lease asset reflects rental escalation clauses, as well as renewal options and/or termination options. The exercise of lease renewal and/or termination options is at our discretion and is included in the determination of the lease term and lease payment obligations when it is deemed reasonably certain that the option will be exercised. When available, we use the rate implicit in the lease to discount lease payments to present value; however, certain leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.
We classify our leases as buildings, vehicles or computer and office equipment and do not separate lease and nonlease components of contracts for any of the aforementioned classifications. In accordance with applicable guidance, we do not record leases with terms that are less than one year on the Condensed Consolidated Balance Sheets.
None of our lease agreements contain material restrictive covenants or residual value guarantees.
Buildings
The Company entered into an -month lease for 3,577 square feet of newly constructed office, laboratory, and warehouse space located in Edina, Minnesota in May 2017. The base rent has annual increases of 2% and the Company is responsible for its proportional share of common space expenses, property taxes, and building insurance. This lease is terminable by the landlord if damage causes the property to no longer be utilized as an integrated whole and by the Company if damage causes the facility to be unusable for a period of 45 days. In January 2020, the Company entered into a lease amendment to extend the lease term through November of 2026 in exchange for receipt of a loan of $42,500 recorded to note payable. The monthly base rent as of June 30, 2023 and March 31, 2023 was $2,294.
The Company entered into a month lease for 2,400 square feet of office space located in Edina, Minnesota in January 2022. This lease will expire in March 2027. The base rent has annual increases of 2.5% and the Company is responsible for its proportional share of common space expenses, property taxes, and building insurance. The monthly base rent as of June 30, 2023 and March 31, 2023 was $2,740 and $2,673, respectively.
On January 10, 2023, the Company entered into a new lease agreement for approximately 14,000 square feet of production and warehouse space with a commencement date of April 1, 2023, which is when the control and right of use for this asset has taken place. The initial monthly base rent is $8,420 and has annual increases of 2.5%. The Company is also responsible for its proportional share of common space expenses, property taxes, and building insurance. The lease will terminate on June 30, 2033 and the Company has a renewal option for a period of five years. The monthly base rent as of June 30, 2023 was $8,420.
Vehicles
We leased vehicles for certain members of our field sales organization in the three months ended June 30, 2023, under a vehicle fleet program whereby the noncancelable lease is for a term of 48 months. The Company recognized an operating lease right-of-use asset for approximately $150,000 and corresponding and equal operating lease liability for the lessee. As of June 30, 2023, in addition to monthly rental fees specific to the vehicle, there are fixed monthly nonlease components that have been included in the ROU operating lease assets and operating lease liabilities. The nonlease components are not significant.
Operating lease expense for the three months ended June 30, 2023 and 2022, was $70,792 and $35,435, respectively.
The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of June 30, 2023:
In compliance with ASC 842, the Company recognized, based on the extended lease terms to June 2026, November 7, 2026, March 2027, and June 2033, a treasury rate of 0.12%, 0.40%, 7.6%, and 4.39%, respectively, an operating lease right-of-use assets for approximately $1,465,000 and corresponding and equal operating lease liabilities for the leases. As of June 30, 2023, the present value of future base rent lease payments based on the remaining lease terms and weighted average discount rate are approximately 5.1 years and 3.94%, respectively, are as follows:
As of June 30, 2023, the present value of future base rent lease payments – net is classified between current and non-current assets and liabilities as follows:
Employment Agreements
The Company has employment agreements with its executive officers. As of June 30, 2023, these agreements contain severance benefits ranging from one month to six months if terminated without cause.
Legal Proceedings
David Masters, a former employee, board member, and consultant to the Company, has threatened to file suit against the Company to recover in excess of $2 million. Masters’ threatened litigation relates to allegations that the Company promised him additional compensation, shares, warrants, and future employment while he was associated with the Company. The Company mediated these claims with Masters in 2022 and executed a mediated settlement agreement resolving these claims for a one-time payment of $180,000, to be effective upon execution of a long form agreement containing this and other settlement terms. The parties appointed the mediator as arbitrator to resolve any disputes arising during the drafting of the long form agreement on commercially reasonable terms. In early 2023, Masters commenced arbitration to have certain terms in the long form agreement decided. The arbitrator issued an award setting the final terms of the agreement. Soon thereafter, Masters refused to execute the long form agreement set by the arbitrator; terminated the law firm representing him in the mediation, negotiations, and arbitration; suggested that the arbitration award was tainted by a conflict of interest; and threatened the claims set forth above. The Company believes that Master’s claims are without merit and does not believe that this matter will have a material impact on its financial position or results of operations.
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GOING CONCERN |
3 Months Ended |
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Jun. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| GOING CONCERN | NOTE 10 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.
The Company incurred net losses $2,893,577 for the three months ended June 30, 2023, had net cash used in operating activities of $2,163,369 for the same period, and has an accumulated deficit of $74,737,606 on June 30, 2023. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months after the date of issuance of these financial statements. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to achieve a level of profitability and/or to obtain adequate financing through the issuance of debt or equity in order to finance its operations.
The Company issued convertible debentures of $550,000 on July 27, 2023 and sold shares of its common stock on August 9, 2023 (See Note 12) and management intends to raise additional funds through the offering of its equity securities. Management believes that the actions presently being taken to further implement its business plan will enable the Company to continue as a going concern. While the Company believes in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and raise additional funds.
These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY | NOTE 11 – STOCKHOLDERS’ EQUITY
Equity Incentive Plan
On July 10, 2020, our Board of Directors unanimously approved the PetVivo Holdings, Inc. 2020 Equity Incentive Plan (the “2020 Plan”), which authorized the issuance of up to shares of our common stock as awards under the 2020 Plan, subject to approval by our stockholders at the Annual Meeting of Stockholders held on September 22, 2020, when it was approved by our stockholders and became effective. On October 14, 2022, the stockholders of the Company approved the PetVivo Holdings, Inc. Amended and Restated 2020 Equity Incentive Plan (the “Amended Plan”), which increased the number of shares of the Company’s common stock which may be granted under the Amended Plan from to . Unless sooner terminated by the Board, the Amended Plan will terminate at midnight on July 10, 2030. The number of shares available to grant under the Plan was at June 30, 2023.
Employees, consultants, advisors of the Company (or any subsidiary), and non-employee directors of the Company will be eligible to receive awards under the Amended Plan. In the case of consultants and advisors, however, their services cannot be in connection with the offer and sale of securities in a capital-raising transaction nor directly or indirectly to promote or maintain a market for PetVivo common stock.
The Amended Plan is administered by the Compensation Committee of our Board of Directors (the “Committee”), which has full power and authority to determine when and to whom awards will be granted, and the type, amount, form of payment, any deferral payment, and other terms and conditions of each award. Subject to provisions of the Amended Plan, the Committee may amend or waive the terms and conditions, or accelerate the exercisability, of an outstanding award. The Committee also has the authority to interpret and establish rules and regulations for the administration of the Amended Plan. In addition, the Board of Directors may also exercise the powers of the Committee.
The aggregate number of shares of PetVivo common stock available and reserved to be issued under the Amended Plan is shares, but includes the following limits:
● the maximum aggregate number of shares of Common Stock granted as an Award to any Non-Employee Director in any one Plan Year will be shares; provided that such limit will not apply to any election of a Non-Employee Director to receive shares of Common Stock in lieu of all or a portion of any annual Board, committee, chair or other retainer, or any meeting fees otherwise payable in cash.
Awards can be granted for no cash consideration or for any cash and other consideration as determined by the Committee. Awards may provide that upon the grant or exercise thereof, the holder will receive cash, shares of PetVivo common stock, other securities or property, or any combination of these in a single payment, installments, or on a deferred basis. The exercise price per share of any stock option and the grant price of any stock appreciation right may not be less than the fair market value of PetVivo common stock on the date of grant. The term of any award cannot be longer than ten years from the date of grant. Awards will be adjusted in the event of a stock dividend or other distribution, recapitalization, forward or reverse stock split, reorganization, merger or other business combination, or similar corporate transaction, in order to prevent dilution or enlargement of the benefits or potential benefits provided under the Amended Plan.
The Amended Plan permits the following types of awards: stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance awards, non-employee director awards, other stock-based awards, and dividend equivalents.
Common Stock
For the three months ended June 30, 2023, the Company issued shares of common stock as follows:
There were shares issued during the three months ended June 30, 2022.
The Company has issued shares of common stock to providers of investor relations services which are reported in the Condensed Consolidated Statements of Changes in Stockholders’ Equity. The value of these shares are reported as a prepaid expense and are amortized to expense over the contractual life of the respective consulting agreements. The amortization of stock issued for services as reported in the Condensed Consolidated Statements of Operations and Cash Flows was $121,290 and $45,050 for the three months ended June 30, 2023 and 2022, respectively.
Time-Based Restricted Stock Units
We have granted time-based restricted stock units to certain participants under the 2020 Plan that are stock-settled with common shares. Time-based restricted stock units granted under the 2020 Plan vest over three years. Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $256,966 and $182,377 for the three months ended June 30, 2023 and 2022, respectively. At June 30, 2023, there was approximately $ of total unrecognized compensation expense related to time-based restricted stock units that is expected to be recognized over a weighted-average period of .
Our time-based restricted stock unit activity for the year ended March 31, 2023 and the three months ended June 30, 2023 was as follows:
Stock Options
Stock options issued to employees and directors typically vest over (one year for directors) and have a contractual term of . Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ and $ for the three months ended June 30, 2023 and 2022, respectively. At June 30, 2023, there was approximately $ of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of years.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. Annually, we make predictive assumptions regarding future stock price volatility, dividend yield, expected term, and forfeiture rate. The dividend yield assumption is based on expected annual dividend yield on a grant date. To date, no dividends on common stock have been paid by us. Expected volatility for grants is based on our average historical volatility over a similar period as the expected term assumption used for our options as the expected volatility. The risk-free interest rate is based on yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. We use the “simplified method” to determine the expected term of the stock option grants. We utilize this method because we do not have sufficient public company exercise data in which to make a reasonable estimate.
Stock options granted for the year ended March 31, 2023 and the three months ended June 30, 2023 were to employees and directors. The fair value of these options on the date of grant was $ and $ for the year ended March 31, 2023 and the three months ended June 30, 2023, respectively.
Options exercisable at June 30, 2023 had exercise prices ranging from $ to $.
Warrants
During the three months ended June 30, 2023 and 2022, no warrants were issued.
A summary of warrant activity for the year ended March 31, 2023 and the three months ended June 30, 2023 is as follows:
Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for warrants was $ and $20,831 for the three months ended June 30, 2023 and 2022, respectively. At June 30, 2023, there was no future unrecognized warrant expense.
For the three months ended June 30, 2023 and 2022, the total stock-based compensation on all instruments was $ and $, respectively.
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SUBSEQUENT EVENTS |
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| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS
The Company sold $550,000 of convertible debentures on July 27, 2023 in a private offering. On August 9, 2023, the Company sold shares of common stock in a registered direct offering to two accredited investors (“Investors”) at a price of $ per share. (“Registere Offering”). In a concurrent private offering (“Private Offering, and together with the Registered Offering the “Offering”), the Company issued an aggregate of 1,200,002 warrants (“Private Warrants”) to the Investors for no additional consideration. The Private Warrants have an exercise price of $2.00 per share, will be exercisable for cash six (6) months after the issuance date and will expire three years following the initial exercise date. Net proceeds from the offering were approximately $1,775,000 after deducting offering expenses of $25,000. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (Policies) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||
| Organization and Description | (A) Organization and Description
The Company is in the business of licensing and commercializing our proprietary medical devices and biomaterials for the treatment and/or management of afflictions and diseases in animals, initially for dogs and horses. The Company began commercialization of its lead product Spryng™ with OsteoCushion™ Technology, a veterinarian-administered, intraarticular injection for the management of lameness and other joint afflictions such as osteoarthritis in dogs and horses in September 2021. The Company has a pipeline of additional products for the treatment of animals in various stages of development. A portfolio of nineteen patents protects the Company’s biomaterials, products, production processes and methods of use. The Company’s operations are conducted from its headquarter facilities in suburban Minneapolis, Minnesota.
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| Basis of Presentation | (B) Basis of Presentation
PetVivo Holdings, Inc. (the “Company”) was incorporated in Nevada under a former name in 2009 and entered its current business in 2014 through a stock exchange reverse merger with PetVivo, Inc., a Minnesota corporation. This merger resulted in PetVivo, Inc. becoming a wholly-owned subsidiary of the Company. In April 2017, the Company acquired another Minnesota corporation, Gel-Del Technologies, Inc., through a statutory merger, which is also a wholly-owned subsidiary of the Company.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The results for the three months ended June 30, 2023, are not necessarily indicative of results to be expected for the year ending March 31, 2024, or for any other interim period or for any future year. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2023.
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| Principles of Consolidation | (C) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its two wholly-owned Minnesota corporations, Gel-Del Technologies, Inc. and PetVivo, Inc. All intercompany accounts have been eliminated upon consolidation.
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| Use of Estimates | (D) Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, inventory obsolescence, estimated useful lives and potential impairment of property and equipment and intangibles, estimate of fair value of share-based payments, distributor rebate payable, provision for product returns, right of use lease assets and liabilities and valuation of deferred tax assets.
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| Cash and Cash Equivalents | (E) Cash and Cash Equivalents
The Company considers all highly-liquid, temporary cash investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at June 30, 2023.
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| Concentration Risk | (F) Concentration Risk
The Company maintains its cash with various financial institutions, which at times may exceed federally insured limits. At March 31, 2023, the Company did have cash balances in excess of the federally insured limits.
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| Accounts Receivable | (G) Accounts Receivable
Accounts receivable consists primarily of amounts due from a distributor (see revenue recognition). Accounts receivable is recorded based on management’s assessment of the expected consideration to be received, based on a detailed review of historical collections. Management relies on the results of the assessment, which includes payment history of the applicable payer as a primary source of information in estimating the collectability of our accounts receivable. We update our assessment on a quarterly basis, which to date has not resulted in any material adjustments to the valuation of our accounts receivable. We believe the assessment provides reasonable estimates of our accounts receivable valuation, and therefore we believe that substantially all accounts receivable are fully collectible. Accordingly, as of June 30, 2023 and March 31, 2023, our allowance for credit losses was zero.
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| Inventory | (H) Inventory
Inventories are recorded in accordance with Accounting Standards Codification (“ASC”) 330, Inventory, and are stated at the lower of cost or net realizable value. We account for inventories using the first in first out (“FIFO”) methodology. Provisions for inventory obsolescence are charged to Cost of Sales. There were no provisions for obsolescence for the three months ended June 30, 2023 and 2022, respectively.
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| Property & Equipment | (I) Property & Equipment
Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after considering their respective estimated residual values) over the assets estimated useful life of 3 to 5 years for production and computer equipment and furniture and 5 to 7 years for leasehold improvements.
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| Patents and Trademarks | (J) Patents and Trademarks
The Company capitalizes direct costs for the maintenance and advancement of their patents and trademarks and amortizes these costs over the lesser of the useful life of 60 months or the life of the patent. We evaluate the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
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| Loss Per Share |
Basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
The Company had warrants outstanding as of June 30, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants is $ per share. These warrants are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of June 30, 2023, which are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had stock options outstanding as of June 30, 2023, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options is $ per share. These stock options are excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had warrants outstanding as of June 30, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these warrants was $ per share. These warrants were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had restricted stock units outstanding as of June 30, 2022, which were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company had options outstanding as of June 30, 2022, with varying exercise prices ranging from $ to $ per share. The weighted average exercise price for these options was $ per share. These options were excluded from the weighted average number of shares because they were considered anti-dilutive.
The Company uses the guidance in ASC 260 to determine if-converted loss per share. ASC 260 states that convertible securities should be considered exercised on the latter of the first day of the reporting period’s quarter or the inception date of the debt instrument. Also, the if-converted method shall not be applied for the purposes of computing diluted EPS if the effect would be anti-dilutive.
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| Revenue Recognition | (L) Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 “Revenue from Contracts with Customers.”
The Company derives revenue from the sale of its pet care products directly to its veterinarian customers in the United States. The Company recognizes revenue when performance obligations under the terms of a contract with the veterinarian customer are satisfied. Product sales occur once control or title is transferred based on the commercial terms. Revenue is recognized upon delivery to the customer, which is when control of these products is transferred and in an amount that reflects the consideration the Company expects to receive for these products. Shipping costs charged to customers are reported as an offset to the respective shipping costs. The Company does not have any significant financing components as payment is received at or shortly after the point of sale.
The Company entered into a Distribution Services Agreement (the “Agreement”) with MWI Veterinary Supply Co. (the “Distributor”) on June 17, 2022. Contracts with the Distributor are evidenced by individual executed purchase orders subject to the terms of the Agreement. The contracts consist of a single performance obligation related to the sale of our pet care products. Product sales occur once control or title is transferred based on the commercial terms in the Agreement. Revenue is recognized upon delivery to the Distributor; payment is due within 60 days. The Agreement provides for a distribution fee payable to the Distributor equal to 5% of gross monthly sales payable in 45 days; the distribution fee is netted against revenue. The Agreement provides for a rebate payable to the Distributor based on annual sales volume that is retroactively applied. The rebate is estimated under the expected value method and is netted against revenue. Sales are subject to various right of return provisions; the Company uses an expected value method to estimate returns and has determined that any returns would be immaterial as of June 30, 2023. As a result, there is no return liability recorded. Shipping and handling costs are a fulfillment activity and are reported as cost of sales.
For the three months ended June 30, 2023 and 2022, the Company recognized revenue from product sales under the Agreement of $33,790 and $0, respectively. This represents 29% of total revenues for the three-month period ended June 30, 2023.
Assets and liabilities (included in accrued expenses) under the Agreement were as follows:
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| Research and Development | (M) Research and Development
The Company expenses research and development costs as incurred.
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| Fair Value of Financial Instruments | (N) Fair Value of Financial Instruments
The Company applies the accounting guidance under ASC 820-10, “Fair Value Measurements”, as well as certain related Financial Accounting Standards Board (“FASB”) staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses and note payable and accrued interest. The carrying amount of the Company’s financial instruments approximates their fair value as of June 30, 2023 and March 31, 2023, due to the short-term nature of these instruments and the Company’s borrowing rate of interest.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation of the Company’s note recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market, and (iii) contractual prices.
The Company had no assets and liabilities measured at fair value on a recurring basis on June 30, 2023 and March 31, 2023.
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| Stock-Based Compensation - Non-Employees |
Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services
The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under the guidance of ASC 505-50.
Pursuant to ASC 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the date of grant.
The fair value of stock options and similar instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:
● Expected term of share options and similar instruments: Pursuant to ASC Paragraph 718-10-50-2(f)(2)(i), the expected term of stock options and similar instruments represents the period of time the stock options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holders’ expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holders’ expected exercise behavior.
● Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii), a thinly traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its stock price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses its average historical volatility over the expected contractual life of the stock options or similar instruments as its expected volatility.
● Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
● Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.
Pursuant to ASC Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a share option and similar instrument that the counterparty has the right to exercise expires unexercised.
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| Stock-Based Compensation |
Stock options are valued using the Black-Scholes option-pricing model. The Black Scholes valuation model requires the input of highly subjective assumptions. The assumptions include the expected term of the option, the expected volatility of the price of our common stock, the expected dividend yield, and the risk-free interest rate. These estimates involve inherent uncertainties and the significant application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future. We recognize compensation expense for these options on a straight-line basis over the requisite service period (see Note 11 – “Stockholders’ Equity”).
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| Income Taxes | (Q) Income Taxes
The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
As required by ASC 450, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
The Company is not currently under examination by any federal or state jurisdiction.
The Company’s policy is to record tax-related interest and penalties as a component of operating expenses.
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| Recent Accounting Pronouncements | (R) Recent Accounting Pronouncements
The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts on an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as insurance premium finance loans held for investment, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted this standard in the condensed consolidated financial statements for the three months ended June 30, 2023. The change had no impact on the Company’s financial statements.
All other newly issued but not yet effective accounting pronouncements have been deemed either immaterial or not applicable. |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (Tables) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||
| SCHEDULE OF RECOGNIZED REVENUE ASSETS AND LIABILITIES | Assets and liabilities (included in accrued expenses) under the Agreement were as follows:
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INVENTORY (Tables) |
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| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INVENTORY | The inventory components are as follows:
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PROPERTY AND EQUIPMENT (Tables) |
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| SCHEDULE OF PROPERTY AND EQUIPMENT | The components of property and equipment were as follows:
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PATENTS AND TRADEMARKS (Tables) |
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| SCHEDULE OF COMPONENTS OF PATENTS AND TRADEMARKS | The components of patents and trademarks, all of which are finite-lived, were as follows:
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ACCRUED EXPENSES (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF COMPONENTS OF ACCRUED EXPENSES | The components of accrued expenses were as follows:
|
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COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ANNUAL UNDISCOUNTED OPERATING LEASE LIABILITY | The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of June 30, 2023:
|
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| SCHEDULE OF BASE RENT LEASE PAYMENTS |
|
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| SCHEDULE OF LEASE CURRENT AND NON-CURRENT ASSETS AND LIABILITIES | As of June 30, 2023, the present value of future base rent lease payments – net is classified between current and non-current assets and liabilities as follows:
|
STOCKHOLDERS’ EQUITY (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF TIME BASED RESTRICTED STOCK UNITS | Our time-based restricted stock unit activity for the year ended March 31, 2023 and the three months ended June 30, 2023 was as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTION |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF STOCK OPTION ACTIVITY |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ADDITIONAL INFORMATION ABOUT STOCK OPTIONS |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF WARRANT ACTIVITY | A summary of warrant activity for the year ended March 31, 2023 and the three months ended June 30, 2023 is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF RANGE OF WARRANT PRICES |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE OF RECOGNIZED REVENUE ASSETS AND LIABILITIES (Details) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Accounts receivable | $ 35,568 | $ 81,510 |
| Rebate liability | 28,000 | 28,000 |
| Distribution fee payable | $ 3,964 | $ 5,187 |
SCHEDULE OF INVENTORY (Details) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Finished Goods | $ 27,473 | $ 13,159 |
| Work in process | 76,011 | 53,398 |
| Raw materials | 302,546 | 303,726 |
| Total Net | $ 406,030 | $ 370,283 |
INVENTORY (Details Narrative) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Inventory | $ 406,030 | $ 370,283 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details Narrative) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Prepaid expenses and other assets | $ 344,266 | $ 491,694 |
| Trade Shows [Member] | ||
| Prepaid expenses and other assets | 83,000 | 42,000 |
| Insurance Costs [Member] | ||
| Prepaid expenses and other assets | 70,000 | 130,000 |
| Supplier Advance [Member] | ||
| Prepaid expenses and other assets | 57,000 | 42,000 |
| Nasdaq and FINRA Fees [Member] | ||
| Prepaid expenses and other assets | 47,000 | 63,000 |
| Board Compensation [Member] | ||
| Prepaid expenses and other assets | 32,000 | 56,000 |
| Software Subscription Fees [Member] | ||
| Prepaid expenses and other assets | $ 26,000 | 19,000 |
| Investor Relations Services [Member] | ||
| Prepaid expenses and other assets | $ 115,000 |
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | $ 987,536 | $ 940,142 |
| Accumulated depreciation | (338,301) | (309,290) |
| Total Net | 649,235 | 630,852 |
| Leasehold Improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | 216,159 | 216,159 |
| Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | 619,773 | 577,067 |
| R&D Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | 25,184 | 25,184 |
| Computer Equipment and Furniture [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total, at cost | $ 126,420 | $ 121,732 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expense | $ 29,011 | $ 25,326 |
SCHEDULE OF COMPONENTS OF PATENTS AND TRADEMARKS (Details) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Patents | $ 3,870,057 | $ 3,870,057 |
| Trademarks | 26,142 | 26,142 |
| Total at cost | 3,896,199 | 3,896,199 |
| Accumulated Amortization | (3,859,688) | (3,857,550) |
| Total net | $ 36,511 | $ 38,649 |
PATENTS AND TRADEMARKS (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Amortization expense | $ 2,138 | $ 2,227 |
SCHEDULE OF COMPONENTS OF ACCRUED EXPENSES (Details) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued payroll and related taxes | $ 170,682 | $ 258,978 |
| Accrued expenses | 210,852 | 188,666 |
| Accrued lease termination expense | 332,238 | 332,238 |
| Total | $ 713,772 | $ 779,882 |
ACCRUED EXPENSES (Details Narrative) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued expense | $ 332,000 | $ 332,000 |
NOTE PAYABLE (Details Narrative) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jan. 31, 2020 |
|---|---|---|---|
| Debt Disclosure [Abstract] | |||
| Notes payable | $ 25,684 | $ 27,351 | $ 42,500 |
| Debt instrument, interest rate | 6.00% | ||
| Notes payable, current liabilities | 7,034 | 6,936 | |
| Note payable other liabilities | $ 18,650 | $ 20,415 |
RETIREMENT PLAN (Details Narrative) - USD ($) |
3 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Retirement Benefits [Abstract] | ||
| Discretionary contributions | $ 12,554 | $ 6,158 |
SCHEDULE OF ANNUAL UNDISCOUNTED OPERATING LEASE LIABILITY (Details) |
Jun. 30, 2023
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| 2024 | $ 152,410 |
| 2025 | 207,061 |
| 2026 | 211,002 |
| 2027 | 187,717 |
| 2028 | 121,165 |
| 2029 | 114,273 |
| Thereafter | 518,517 |
| Total | 1,512,145 |
| Less: amount representing interest | (142,566) |
| Total | $ 1,369,579 |
SCHEDULE OF BASE RENT LEASE PAYMENTS (Details) |
Jun. 30, 2023
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| Present value of future base rent lease payments | $ 1,369,579 |
| Base rent payments included in prepaid expenses | |
| Present value of future base rent lease payments – net | $ 1,369,579 |
SCHEDULE OF LEASE CURRENT AND NON-CURRENT ASSETS AND LIABILITIES (Details) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Operating lease right-of-use asset | $ 1,369,579 | |
| Total operating lease assets | 1,369,579 | $ 317,981 |
| Operating lease current liability | 152,214 | 78,149 |
| Operating lease other liability | 1,217,365 | $ 239,832 |
| Total operating lease liabilities | $ 1,369,579 |
GOING CONCERN (Details Narrative) - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jul. 27, 2023 |
Mar. 31, 2023 |
|
| Subsequent Event [Line Items] | ||||
| Net loss | $ 2,893,577 | $ 1,965,428 | ||
| Net cash used in operating activities | 2,163,369 | $ 1,701,699 | ||
| Accumulated deficit | $ 74,737,606 | $ 71,844,029 | ||
| Subsequent Event [Member] | ||||
| Subsequent Event [Line Items] | ||||
| Convertible debentures | $ 550,000 | |||
SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTION (Details) - $ / shares |
3 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
|
| Expected term | 7 years | 7 years |
| Expected volatility, minimum | 84.90% | 111.70% |
| Expected volatility, maximum | 93.20% | 146.90% |
| Risk-free interest rate, minimum | 3.46% | 2.96% |
| Risk-free interest rate, maximum | 3.89% | 4.35% |
| Expected dividend yield | 0.00% | 0.00% |
| Minimum [Member] | ||
| Fair value on the date of grant | $ 1.56 | $ 1.87 |
| Maximum [Member] | ||
| Fair value on the date of grant | $ 2.15 | $ 2.79 |
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
|||||
| Equity [Abstract] | ||||||
| Options Outstanding, Beginning | 884,849 | 195,000 | ||||
| Weighted Average Exercise Price Per Share, Beginning | [1] | $ 2.19 | $ 1.56 | |||
| Weighted Average Remaining Contractual Life | 6 years 3 months 18 days | 6 years 10 months 24 days | ||||
| Aggregate Intrinsic Value, Beginning | [2] | $ 307,750 | $ 100,200 | |||
| Options Outstanding, Granted | 374,239 | 714,849 | ||||
| Weighted Average Exercise Price Per Share, Granted | [1] | $ 2.30 | $ 2.37 | |||
| Options Outstanding, Cancelled | (25,000) | |||||
| Weighted Average Exercise Price Per Share, Cancelled | [1] | $ 2.46 | ||||
| Options Outstanding, Ending | 1,259,088 | 884,849 | ||||
| Weighted Average Exercise Price Per Share, Ending | [1] | $ 2.22 | $ 2.19 | |||
| Aggregate Intrinsic Value, Ending | [2] | $ 86,300 | $ 307,750 | |||
| Stock options exercisable | 192,122 | |||||
| ||||||
SCHEDULE OF ADDITIONAL INFORMATION ABOUT STOCK OPTIONS (Details) - $ / shares |
3 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
|
| Equity [Abstract] | ||
| Non-vested options, beginning of year | 709,394 | 195,000 |
| Non -vested options, end of year | 1,066,966 | 709,394 |
| Vested options, end of year | 192,122 | 175,455 |
| Weighted-average grant date fair value, non-vested options, beginning of year | $ 2.23 | $ 1.56 |
| Weighted-average grant date fair value, non-vested options, end of year | 2.26 | 2.23 |
| Weighted-average grant date fair value, vested options, end of year | 1.99 | 2.01 |
| Weighted-average grant date fair value, forfeited options, during the year |
SCHEDULE OF WARRANT ACTIVITY (Details) - Warrant [Member] - $ / shares |
3 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
| Number of Warrants, Outstanding, Beginning balance | 3,562,817 | 3,757,484 |
| Weighted-Average Exercise Price, Outstanding, Beginning balance | $ 5.05 | $ 4.95 |
| Warrants Exercisable, Outstanding, Beginning balance | 3,540,317 | 3,693,734 |
| Weighted-Average Exercise Price, Beginning balance | $ 5.07 | $ 5.00 |
| Number of Warrants, Exercised for cash | (48,664) | |
| Weighted-Average Exercise Price, Exercised for cash | $ (1.36) | |
| Number of Warrants, Expired | (16,750) | (146,003) |
| Weighted-Average Exercise Price, Expired | $ (4.18) | $ (3.70) |
| Number of Warrants, Outstanding, Ending balance | 3,546,067 | 3,562,817 |
| Weighted-Average Exercise Price, Outstanding, Ending balance | $ 5.06 | $ 5.05 |
| Warrants Exercisable, Outstanding, Ending balance | 3,523,567 | 3,540,317 |
| Weighted-Average Exercise Price, Ending balance | $ 5.08 | $ 5.07 |
SCHEDULE OF RANGE OF WARRANT PRICES (Details) - Warrant [Member] - $ / shares |
3 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants, Outstanding | 3,546,067 | ||
| Weighted-Average Exercise Price, outstanding | $ 5.06 | $ 5.05 | $ 4.95 |
| Weighted-Average Remaining Contractual Life (Years), Outstanding | 3 years 14 days | ||
| Number of Warrants, Exercisable | 3,523,567 | 3,540,317 | 3,693,734 |
| Weighted-Average Exercise Price, Exercisable | $ 5.08 | $ 5.07 | $ 5.00 |
| Range One [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants, Outstanding | 347,073 | ||
| Weighted-Average Exercise Price, outstanding | $ 1.35 | ||
| Weighted-Average Remaining Contractual Life (Years), Outstanding | 3 years 2 months 4 days | ||
| Number of Warrants, Exercisable | 347,073 | ||
| Weighted-Average Exercise Price, Exercisable | $ 1.35 | ||
| Range One [Member] | Minimum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | 1.20 | ||
| Range One [Member] | Maximum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | $ 2.00 | ||
| Range Two [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants, Outstanding | 155,438 | ||
| Weighted-Average Exercise Price, outstanding | $ 2.22 | ||
| Weighted-Average Remaining Contractual Life (Years), Outstanding | 1 year 4 months 2 days | ||
| Number of Warrants, Exercisable | 132,938 | ||
| Weighted-Average Exercise Price, Exercisable | $ 2.22 | ||
| Range Two [Member] | Minimum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | 2.01 | ||
| Range Two [Member] | Maximum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | $ 4.00 | ||
| Range Three [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Number of Warrants, Outstanding | 3,043,556 | ||
| Weighted-Average Exercise Price, outstanding | $ 5.63 | ||
| Weighted-Average Remaining Contractual Life (Years), Outstanding | 3 years 1 month 9 days | ||
| Number of Warrants, Exercisable | 3,043,556 | ||
| Weighted-Average Exercise Price, Exercisable | $ 5.63 | ||
| Range Three [Member] | Minimum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | 4.01 | ||
| Range Three [Member] | Maximum [Member] | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Warrant exercise price | $ 5.63 |
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 14, 2022 |
Jun. 30, 2023 |
May 31, 2023 |
Apr. 30, 2023 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Mar. 31, 2023 |
Oct. 13, 2022 |
Jul. 10, 2020 |
|||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Sale of Stock, Number of Shares Issued in Transaction | 793,585 | ||||||||||
| Proceeds from issuance of warrants | $ 2,182,359 | ||||||||||
| Proceeds from Issuance or Sale of Equity | $ 88,765 | ||||||||||
| Sale of Stock, Price Per Share | $ 2.75 | ||||||||||
| Proceeds from Issuance of Common Stock | $ 1,956,094 | $ 137,500 | |||||||||
| Vesting of restricted stock units, value | |||||||||||
| Stock issued for services | 123,078 | ||||||||||
| Amortization of prepaid stock issued for services | $ 121,290 | 45,050 | |||||||||
| Stock options contractual term | 6 years 3 months 18 days | 6 years 10 months 24 days | |||||||||
| Stock-based Compensation | $ 413,030 | 231,231 | |||||||||
| Exercise price | [1] | $ 2.30 | $ 2.37 | ||||||||
| Warrants issued | $ 0 | $ 0 | 0 | ||||||||
| Minimum [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Exercise price | $ 1.39 | ||||||||||
| Maximum [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Exercise price | $ 2.79 | ||||||||||
| Restricted Stock Units (RSUs) [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Vesting of restricted stock units, shares | 6,250 | ||||||||||
| Time-Based Restricted Stock Units [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Restricted stock compensation expense | $ 256,966 | 182,377 | |||||||||
| Unrecognized pre-tax compensation expenses | $ 664,000 | $ 664,000 | |||||||||
| Unrecognized compensation expenses recognition period | 1 year | ||||||||||
| Equity Option [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Unrecognized compensation expenses recognition period | 1 year 10 months 24 days | ||||||||||
| Stock options vesting period | 3 years | ||||||||||
| Stock options contractual term | 7 years | ||||||||||
| Stock-based Compensation | $ 230,653 | $ 28,023 | |||||||||
| Unrecognized compensation expenses | $ 1,567,000 | $ 1,567,000 | |||||||||
| Common Stock [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Common stock sold, shares | 880,133 | 0 | |||||||||
| Warrant [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Stock-based Compensation | $ 0 | $ 0 | |||||||||
| Chief Executive Officer [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Vesting of restricted stock units, shares | 10,100 | 10,100 | 10,100 | 30,300 | |||||||
| Vesting of restricted stock units, value | $ 74,589 | ||||||||||
| Service Provider [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Stock issued for services, shares | 16,666 | 16,666 | 16,666 | ||||||||
| Stock issued for services | $ 34,165 | $ 40,332 | $ 48,581 | ||||||||
| Employees And Directors [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Fair value of options on the date of grant | $ 679,887 | $ 1,543,087 | |||||||||
| 2020 Equity Incentive Plan [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Number of shares of our common stock authorized | 1,000,000 | ||||||||||
| Amended Plan [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Number of shares of our common stock authorized | 3,000,000 | 1,000,000 | |||||||||
| Number of shares available to grant | 1,134,235 | 1,134,235 | |||||||||
| Common stock available and reserved to be issued | 3,000,000 | ||||||||||
| Amended Plan [Member] | Non employee Director [Member] | |||||||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
| Maximum aggregate number of shares of common stock granted | 10,000 | ||||||||||
| |||||||||||
SUBSEQUENT EVENTS (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|---|
Aug. 09, 2023 |
Aug. 09, 2023 |
Apr. 30, 2023 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Mar. 31, 2023 |
Jul. 27, 2023 |
|
| Subsequent Event [Line Items] | |||||||
| Number of shares sold | 793,585 | ||||||
| Sale of stock, price per share | $ 2.75 | ||||||
| Proceeds from issuance of common stock | $ 1,956,094 | $ 137,500 | |||||
| Subsequent Event [Member] | |||||||
| Subsequent Event [Line Items] | |||||||
| Convertible debentures | $ 550,000 | ||||||
| Number of shares sold | 1,200,002 | ||||||
| Sale of stock, price per share | $ 1.50 | $ 1.50 | |||||
| Proceeds from Issuance Initial Public Offering | $ 1,200,002 | ||||||
| Exercise price | $ 2.00 | $ 2.00 | |||||
| Proceeds from issuance of common stock | $ 1,775,000 | ||||||
| Deferred offering costs | $ 25,000 | $ 25,000 | |||||